When a variable yt is stationary we require that the mean and variance are constant (do not vary in time). You will need to take the expectation of yt , Etyt , to compute the mean and the variance of yt , Var t(yt).

Using the equation yt = y0 + e1 + e2 + e3 + ... + et-2 + et-1 + et, show that yt is non-stationary. Show your steps and any assumptions you have used.

Using the equation yt = 1 + yt1 + et, show that yt is non-stationary. Show your steps and any assumptions you have used.